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Borchardt v. State Farm Fire and Casualty Co.

United States Court of Appeals, Eighth Circuit

July 29, 2019

Todd Borchardt; Michele Borchardt; Danielle Shaver Plaintiffs - Appellants
State Farm Fire and Casualty Company Defendant-Appellee Dillon Borchardt Plaintiff

          Submitted: June 11, 2019

          Appeal from United States District Court for the District of Minnesota

          Before LOKEN, KELLY, and ERICKSON, Circuit Judges.


         A fire destroyed Todd and Michele Borchardt's home located in Byron, Minnesota. A jury determined the fire was intentionally set, although not by Todd, Michelle, or Danielle Shaver, the Borchardts' daughter. Additionally, the jury found that Todd, Michele, and Danielle (collectively, "the Borchardts") each willfully, and with intent to defraud, concealed or misrepresented a material fact or circumstance relating to the fire or the insurance claim submitted to State Farm Fire and Casualty Company ("State Farm"). The district court[1] entered judgment awarding no damages to the Borchardts and awarding $9, 927.50 in damages to Dillon Borchardt for his insurance claim. The Borchardts argue on appeal that State Farm failed to prove they made a material misrepresentation to State Farm and thus the district court erred in denying their motion for judgment as a matter of law. We affirm.

         I. Background

         In March 2006, Todd and Michele Borchardt purchased a house in Byron, Minnesota, for $254, 000.00 with the financial assistance of Todd's parents. Although the house was purchased without a loan, the Borchardts borrowed $54, 000.00 from a bank to finish the basement and make it handicap accessible. Their monthly mortgage payment was $254.00. Michele testified that during her entire relationship with Todd, approximately 25 years, they experienced financial difficulties. At times, they borrowed money from other people to pay bills and other times would "finagle things to pay them."

         In September of 2014, the Borchardts' children, Danielle (aged 23) and Dillon (aged 16), and Danielle's boyfriend, Jeff Lawson, resided in the home with Todd and Michele. When the house had previously been in foreclosure proceedings, the Borchardts borrowed money from others or withdrew money from a retirement account to clear the default. Beginning in 2010, the Borchardts tried to sell the home, both on their own and with the help of real estate agents. No offer to purchase was ever conveyed to the Borchardts. In July 2013, Todd lost his job as a custodian at Mayo Clinic, a job he had held for 12 years. Michele was unable to perform her duties as an assistant head cook after undergoing surgery in December 2013. While Todd was able to find work through a temporary service mowing lawns, by September 2014 Todd and Michele were behind on all of their bills and no longer had any savings or retirement accounts. They last made a mortgage payment in April 2014.

         On Monday, September 8, 2014, the electricity to the Borchardts' home was disconnected for nonpayment. The Borchardts made plans to camp for the weekend because the campground had hot showers. Their weekend plans changed to renting a local hotel room when it was cold and rainy on Friday morning. Around dinnertime on Friday, September 12, 2014, Todd, Michele, Dillon, Danielle, Danielle's boyfriend, and the family dogs left the home, drove to Taco Bell to eat, and then drove to the hotel for the night.

         Sometime between midnight and 1:00 a.m. on Saturday, September 13, 2014, the Olmsted County (Rochester) Sheriff's Department called Danielle's phone. Michele answered. The deputy told Michele that the house was on fire. Michele and Todd immediately left the hotel and drove to the house to find it engulfed in flames. Michele and Todd were on scene for about an hour and then returned to the hotel when it became too emotionally difficult for Michele to watch the fire.

         As part of its investigation, State Farm retained Doug Noah, a fire investigator, to assist in determining the cause of the fire. Noah opined that the fire was incendiary in origin, the most probable cause arising from application of an open flame to combustible materials. State Farm also discovered that approximately two years before the fire, the Borchardts had no insurance on the house. The Borchardts subsequently purchased a homeowners policy from State Farm. They received a cancellation notice in January 2014 for nonpayment. The policy lapsed on March 6, 2014, when the Borchardts did not make the required payment. In the spring of 2014 when the Borchardts received their 2013 tax year refund, they bought a new State Farm homeowners policy and paid for the entire year's premium up front. The policy period began on April 28, 2014, and is the policy at issue here.

         In a sworn proof of loss statement, the Borchardts made a claim to State Farm for $330, 000.00 for the damaged house plus other structures and landscape and a claim for $202, 177.13 for damaged personal property. State Farm denied the claim for two reasons:

1. The fire was caused or procured by or at the direction of an insured in violation of the terms and conditions of the State Farm policy, as well as the public policy of the state of Minnesota, all of which render the policy void.
2. There has been concealment and misrepresentation of material facts or circumstances concerning the insurance of the subject thereof, contrary to the State Farm policy and/or Minnesota statutory ...

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